This book provides a comprehensive understanding of the relationship between FDI and economic growth with special attention to the countries of Central and Eastern Europe. Within a new semi-endogenous growth model, the book illustrates the impact of FDI on economic growth for every stage of development of a country. Developing countries experience both strong capital accumulation and technology transfer through FDI, whereas highly developed countries mainly benefit from FDI as a vehicle of global technology diffusion. Departing from this universal model, the book then investigates the impact of FDI on economic growth for the transition countries of Central and Eastern Europe.

Some Asian political leaders and Western academics have recently claimed that China is unlikely to produce an open political system. This claim rests on the idea that “Confucian culture” provides an alternative to Western civil values, and that China lacked the democratic traditions and even the horizontal institutions of trust that could build a civil society. An opposed school of thought is far more optimistic about democracy, because it sees market economies of the kind China has begun to foster as pushing inexorably against authoritarian political control and reproducing Western patterns of change.